SEBI finds ₹31.46 crore diverted via interest-free loans to related entities

This order addresses SEBI's findings regarding Tarapur Transformers Limited (TTL) and its associated entities for allegedly diverting funds through interest-free loans to related parties and inflating financial statements via fictitious trade receivables between April 2018 and March 2023.

Who it concerns: Tarapur Transformers Limited, Choudhary Global Limited, Veedhata Towers Private Limited, Lorraine Finance Private Limited, Rohit Steel Lamination Private Limited, Deekay Iron and Steel Private Limited, Kumudini Engineering Private Limited, Ashadeep Multitrade Private Limited, Suresh Sakharam More, Rajendra Kumar Choudhary, Kanji Dayabhai Chavda, Suresh Kumar Choudhary, Anil Mahabir Gupta, Kiren Shrivastav, Michael Elias Dalmet, Reena Omprakash Trivedi, Rachana Baria, Pooja Soni, and Ganesh Gangaram Madhari.

What SEBI found or ordered

• SEBI found that TTL diverted a net amount of Rs. 31.46 crore to related entities via interest-free loans and advances.
• SEBI found that TTL recorded fictitious transactions with related entities, resulting in inflated revenue and net worth, and wrote off Rs. 14.37 crore in trade receivables.
• SEBI identified corporate governance failures, including non-disclosure of related party transactions and misleading disclosures regarding Audit Committee meetings.
• SEBI found that Noticee No. 18 (Pooja Soni) failed to respond to the Show Cause Notice or attend hearings despite multiple opportunities, leading to an ex parte presumption of admission of charges.
• SEBI noted that TTL did not create provisions for doubtful loans of Rs. 14.04 crore in FY 2022-23 and FY 2023-24, despite marking them as doubtful.

Also in the document

• SEBI noted that TTL has 18,072 public shareholders holding 78.05% of its total equity share capital.
• SEBI stated that there is no contemplation of disgorgement of proceeds against the Noticees in this proceeding.
• The investigation period covered from April 01, 2018, to March 31, 2023.